Passionate entrepreneurs, investors, advocates, and business leaders are having conversations about creating regenerative food systems. Yet policy continues to protect incumbent interests and their economies of scale. As a result, we have yet to see fundamental shifts in the underlying systems. Philanthropic capital has untapped potential to change – or break – the status quo.
Early stage ‘Good Food’ companies are not supported because they are judged too risky in the current system. This system of laws, regulations, and financial incentives force the pursuit of market rate returns. Facing this persistent pressure, how can the private sector be a catalyst for and a driver of systemic change?
The Importance of Philanthropic Capital
Here is something I’m trying: rather than chasing investors for my clients based on proving a business case for sustainability that generates near market-based returns, I’m shifting my energy to using philanthropic capital. Freed from expectations around strictly financial returns, philanthropic capital can be leveraged in a wide variety of ways to nurture the kind of innovative, creative ideas we need.
- lowering investment risk for early stage and unproven entrepreneurs
- expanding financing to those without access to credit
- establishing and implementing non-traditional success and impact metrics
- creating long-term runways for regenerative ventures
The monetary incentives for donors are built into the existing system. They understand and are more receptive to off-balance sheet returns. This increases the odds that some firms will achieve escape velocity and scale. As a result, they may intervene in the policy process, accelerating transformation in a regenerative cycle. I believe that philanthropic capital is uniquely positioned to viably bring new responsible food entities to market AND reshape the market structure in which they operate.
Nowhere are the structural issues more pernicious than in the food industry. After over a decade witnessing the problems caused by the way we make, sell, and consume food, I am ready for something different. It’s time for new thinking on how to catalyze a more comprehensive ecosystem for food-related social entrepreneurship.
By definition, regenerative practices give back to the system from which they originated, whether that’s a plot of land, a social network or neighborhood, or an urban ecosystem. As participants in this movement, we do not need to wait for a widespread “aha” moment within our inherently extractive financial system. Let’s make better use of the tools we do have to nurture and launch the change we want. I look forward to deepening connections and conversations about this emerging, exciting frontier of philanthropy at ReGen18 in May.
About the Author
Wendy Weiden has over ten years of experience as a food systems entrepreneur, consultant, and educator. She graduated from Presidio Graduate School determined to “change the (food) world.” While at Presidio, Wendy developed and co-taught a class on market failures, exploring the usually hidden role that government plays in driving or hindering the options for scaling social ventures.
[This article was originally posted on ReGen18 Blog on April 18, 2018]